SCOOP: How the U.S. Tax Court backlog is punishing American taxpayers
A little-known court is punishing American taxpayers. Here's how.
For the last decade, the mainstream media has breathlessly followed the efforts by the Democratic Party establishment and liberal bureaucrats to stop President Donald Trump by hook or by crook. But eight months into Trump’s second administration, another victim has emerged: over one-thousand American taxpayers stuck in a deeply backlogged U.S. Tax Court.
These taxpayers, owners of conservation easements, have taken advantage of a decades-old tax plan designed to aid natural conservation. In exchange for promising never to develop their real estate further, property owners can deduct the value they could have gained from their taxes.
Since 1980, this tax structure has saved taxpayers billions of dollars and preserved vast tracts of American beauty. As a businessman, Donald Trump used the provision to protect historic lands at Mar-a-Lago and Trump National Golf Club Westchester.
This may explain why President Barack Obama’s IRS changed the rules on conservation easements in the waning days of their reign before Trump took over. On December 23, 2016, the IRS announced, without Congressional input, that it would value all conservation easement transactions at zero — unless taxpayers were willing to go to court.
The IRS’s decisions set off a series of court cases before the U.S. Tax Court, a unique federal court mostly staffed by former IRS employees. That backlog now stretches to nearly 1,000 cases with billions in taxable income on the line.
It also allowed aggressive investigation and prosecution of President Trump by liberal Democrats. Following years of investigations by Sen. Ron Wyden (D., Ore.), the valuation of the President’s golf course in Westchester was at the core of New York Attorney General Letitia James’s case against the Trump Organization.
That case resulted in millions of fines and the loss of Donald Trump’s license to do business in New York state.
Despite overcoming lawfare from James and his other opponents to win re-election, President Trump’s second administration has yet to put a stop to the cases against conservation easement owners. The U.S. Tax Court completes about 10-20 cases a year, at a cost to the taxpayer of around $750,000 per case. It will take decades for the backlog to clear.
Conservation easement owners also decry the structure and conduct of a court system they claim gives the IRS home-field advantage. In one recent case, IRS agents were found to improperly backdate forms, something that would put private tax filers at risk of steep fines or jail time. A judge ruled it “legally harmless.”
IRS officials have also been found to seek punitive fraud fines against easement owners, whether or not there are “traditional badges of fraud.”
The IRS has been in flux throughout the second Trump administration. It quickly became a target for Elon Musk’s early DOGE activities, which targeted the 93,000 additional IRS agents hired under Joe Biden.
It is also on its sixth commissioner since Inauguration Day, as former Rep. Billy Long resigned after less than two months in the role. US Treasury Secretary Scott Bessent is currently serving as acting commissioner.
With a new nominee for IRS Commissioner expected soon, conservation easement owners are hoping for a policy change. Many have proposed a settlement offer, a practice dating back to the Reagan era, prioritizing ending costly legal battles and bringing money into the Treasury now.
The IRS has already proposed two settlements — one at eye-blistering cost to easement owners and one that requires unanimity among partners. Both have been rejected by those at legal loggerheads with the IRS.
Instead, easement owners are calling for the next IRS commissioner to return to traditional practice after the Obama-Biden divergence and offer a reasonable settlement to individuals. Surveys indicate this could eliminate about 85 percent of the legal backlog and bring up to three billion dollars into the Treasury over the next three years.
Whatever the final outcome, many express surprise that this aggressive taxation policy begun by Obama and pursued by Biden has not changed with the restoration of President Trump. With a settling of the IRS’s upheaval over the last eight months, that may be about to change.